Idaho's Weekly Journal of Local & National Commentary Week
2815

Not one member of the Federal Reserve -- or 99% of today’s PhD economists or
stock market pundits -- can correctly answer the following basic questions
in economics:

(1) What is the difference between money and a paper receipt for money?

(2) From where, exactly, does the non-backed U.S. Dollar obtain its value?

(3) What is the difference between today’s U.S. Dollar and “real capital?”

Therefore, not knowing the answers to these three basic questions, the
Federal Reserve erroneously continues to inject trillions of worthless,
non-backed Monopoly Money into the banking system, under the false
assumptions that (1) green paper printed on a U.S. Treasury printing press
magically obtains “value,” (2) the non-backed U.S. dollar is the same as
“real capital” and, (3) consumers rapidly spending trillions and trillions
of newly injected National Wallpaper can somehow “stimulate” the enrichment
of our economy.

The real purpose of a federal “monetary stimulus” package is for the Federal
Reserve to bail out their billionaire buddies in banking and pass the
monetary inflation on to the taxpayers in the form of higher prices for all
commodities and services.

Washington,
DC – Turn on the TV, girl friends, and all you hear these days are arguments
about how much money the Federal Reserve central bankers should inject into
the U.S. economy. Nobody bothers to ask whether
a central bank should inject trillions of dollars into the
economy, or whether a central bank should even
exist. Everybody simply assumes
that the Federal Reserve should exist, and should pump money
into the market; their only questions are: how much, and by what method?

But wait.

Shouldn’t
we know exactly what we’re talking about when we advocate a potential
billion or trillion or quadrillion dollar undertaking for the U.S. economy,
executed by a private group of central bankers or Congress? Shouldn’t we be
asking important questions such as, “By the way, little Lord Fauntleroy of
the U.S. Exchequer, what exactly is money,
anyway? What does the U.S. Dollar represent?
Is it the same as ‘real capital?’From where does the U.S. Dollar obtain its ‘value?’”

It seems
rather slipshod that nobody bothers to establish their economic premises as
they propose to perform this huge injection of undefined “money” and yet
everybody is eager to inject trillions and trillions of U.S. Dollars into
the U.S. economy to “stimulate” us to spend money as fast as we can to
“save” us all from that mysterious plague from Mars called: a “recession.”

Nobody
defines what a “recession” is either, or where it came from.

So, just
what is the definition of the U.S. Dollar?

First, we
know what the Dollar is not. It is not a gold-backed promissory note. It
is not a paper receipt redeemable for gold or silver coins -- or any other
commodity -- at the U.S. Treasury. It is not backed by America’s GDP because
the Federal Reserve does not own America’s GDP and thus cannot issue paper
receipts for collateral it doesn’t own – nor would it be legal for you to
redeem your neighbor’s car, TV, or house by turning your Federal Reserve
Notes into the U.S. Treasury, which is what a collateralized promissory note
by the Federal Reserve would be.

In short,
the U.S. Dollar is not backed by anything.

Since the
definition of money is a commodity, and paper money is defined as a receipt for a
commodity, the U.S. Dollar is neither money or paper money because it
doesn’t qualify as either a commodity or a paper receipt for a commodity.
The most that can be said of our U.S. Dollar is
that it has now morphed into pulp fiction.

So, if
it’s not backed by gold, silver, the GDP, or any other commodity, from
where, exactly, does the U.S. Dollar, or Federal Reserve Note, obtain its
“value?”

Answer:
from citizens who have yet to figure out that paper isn’t gold.

The U.S.
Dollar has no “value” per se. It is not a contract, it is not an invoice for
gold stored in the U.S. Treasury, and printing up trillions and trillions of
copies of U.S. Dollars with no backing is not much different than
counterfeiting a trillion copies of the pink slip to your ’57 Chevy and
selling all trillion pink slips to the public -- and then making all the pink slips
irredeemable for the '57 Chevy. Welcome to today's U.S. Dollar and
fractional reserve banking. U.S. Dollars are simply rectangular little pieces of green
paper printed up on U.S. Treasury printing presses for a cost of 3-4 cents
per any denomination. The One Dollar bill costs 3-cents, the Five Dollar
bill costs 3-cents, the Twenty Dollar bill costs 3-cents, and the One
Hundred Dollar bill costs 3-cents. Which, adjusted for inflation, is
what today's Dollar is worth relative to the 1980 Dollar: 3-cents.

Right
about now, somebody is going to pop up and say, “But wait. I can spend the
Dollar at the grocery store and buy a loaf of bread. How can you say it has
no “value?”

Yes, you
can spend a Dollar at the grocery store for groceries. In 1900 a loaf of
bread cost 5-cents; in 1930 it cost 10-cents; in 1950 it cost 70-cents; in
1980 it cost $1.69; in 1990 it cost $2.89; in 2000 it cost $3.89; today in
2008 it costs $4-$5 per loaf. Yes, indeed, Margie, you sure can shop at the
grocery store using the hyper-inflated U.S. Dollar. And, at the current
rate of inflation, guess what a loaf of bread is going to cost in 2010?
Would you believe $20? How about in 2015? Would you believe $100? No?

Listen up, girl
friends:

In 1914, Germany’s Fed Reserve, the Reichsbank, suspended conversion of its
paper money into gold. By November 1923, after continual “injections of
liquidity,” Reich Marks in circulation soared past 92.8 quintillion Marks
and skyrocketed past 496 quintillion Marks through July of 1924. On Oct 25,
1923, the Reichsbank apologized that it had been able to only print 120
quadrillion Marks that day, but the demand was for one quintillion Marks.
Finally, after nobody would accept the Mark, the Reichsbank devalued to a
new Rentenmark convertible at 1 trillion to one. By Nov 1923, circulation
had increased 245 billion times and prices 1,380 billion times. Inflation
finally stopped in one day when 4.2 Rentenmarks (4.2 trillion old Marks)
exchanged for 1 Dollar, which was convertible into gold. Germany, via the
Dollar, finally went back to the gold standard, after destroying its entire
economy in 9 years through hyperinflation of its non-backed paper money.
– Dr.
H. Hazlitt, Economist

Today, in 2007, after FDR dumped the gold standard in 1933 and Nixon cut all
dollar ties to gold in 1971, our derivative markets currently exceed a half
a quadrillion dollars or $500,000,000,000,000 – five hundred trillion
dollars – of non-collateralized paper fueled by America’s central bank, the
Federal Reserve. And what is it that everybody is screaming for more of?
The injection of billions and billions of more non-collateralized paper
money as “liquidity” to “spur” the “growth” of the economy.

Sound familiar?

So here we
are in January 2008 with President Bush, Federal Reserve Chief Ben Bernanke,
and U.S. Treasury Secretary Henry Paulson showing up on national TV and
announcing that they desperately need to inject 1% ($140 billion) of the
current U.S. GDP ($14 trillion) into the economy to “stimulate” consumers to
spend, as rapidly as possible, more U.S. Dollars to pull the nation out of
its current stagflation and recession.

This is insane. Since the U.S. Dollar is not money, and is not a paper
receipt for money, and is not collateralized by anything, and is not “real
capital” – “capital” is any tangible commodity such as gold, or a gold
certificate, or a building, or a manufacturing plant, or information about
gene mapping, etc. – then it is sheer lunacy to inject more and more pieces
of green paper into the economy and call it a “stimulation.”

Non-collateralized paper is not “real capital.”

Previous hyper-inflation of the economy with trillions of pieces of debased
green paper is THE CAUSE of the current stagflation and recession (and
housing market depression). Injecting more hyper-inflation of the
economy with quadrillions of pieces of what is becoming our National Toilet
Paper is like pouring more gasoline on a raging forest fire. It will
simply cause more price inflation, more unemployment, and a bigger
stagflation and recession.

Once
again, the U.S. Dollar, which is non-collateralized paper, is not “real
capital” and thus cannot “stimulate” anything except higher prices and
unemployment.

In short,
the current recession was CAUSED by the Federal Reserve hyper-inflating our
non-backed U.S. Dollar. Whether they do it via setting low interest rates
for either the Prime Rate or Interbank loans or subprime mortgage lending to
their buddies in the investment community on Wall Street or through their
latest vehicle called TAFs (Term Auction Facility) makes no difference.
Inflation is inflation. Garbage in, garbage out.

The solution is for the Federal Reserve to stop injecting more fake money
into the economy.

More
specifically, the solution to our current U.S. recession is to (1) dissolve
the Federal Reserve, (2) dump the IRS which was created to enforce the
collection of personal and corporate income taxes to pay for the Federal
Reserve’s cleverly concocted National Debt, (3) go back to a 100% gold
backed monetary system, no fractional reserve banking, and (4) stop
Congress’ incessant spending.

In
summary, the best thing the government can do to help solve the financial
mess it created by previous monetary manipulations is simple. Get out of
the economy. It’s called: “Laissez-faire!” Which means free market
capitalism, no Federal Reserve, no central bankers, no fractional reserve
banking, and YES, a return to real constitutional money, which is gold and
silver. The last thing we need is for the Federal Reserve or Congress to
inject trillions and trillions of more fake paper money into the economy
with phony-baloney “stimulus” packages concocted by everybody and their
idiot brother who think paper is gold. – FM Duck